ECONOMY:

Governor: Salary cuts possible, any tax hike must be temporary

Monday, Nov. 10, 2008 | 1:21 p.m.

Nov. 7 -- Gibbons may be softening on anti-tax stance
Oct. 22 -- Hard lesson: Budget cuts mean layoffs
Oct. 10 -- Gibbons: Special legislative session might be needed
Oct. 6 -- Lawmakers look to public for ideas

Archive of Sun politics stories

CARSON CITY – Gov. Jim Gibbons doesn’t favor increasing Nevada’s sales tax or extending it to services to solve the state budget crisis.

Any tax increase will have to sunset – have a firm ending date. “It is only in place for the period of time this economic downturn is in place,” he said.

The state faces a shortfall of $300 million or an additional 9.5 percent this fiscal year, which ends June 30th. Agencies have already sliced 4.5 percent from their budgets and then reduced them an additional $3.2 percent.

And an estimated $1.5 billion will have to be cut from the $7.1 billion budget agencies are seeking for the next two fiscal years.

The governor told reporters he didn’t know if a special session of the Legislature would be needed before the 2009 regular session convenes in February.

He will meet again on Friday with key legislators to examine all the options.

One thing he mentioned is cutting salaries. “I’m willing to take a salary reduction,” he said. His pay now is $141,000. “I would like to see it start at the top.”

That would take approval of the Legislature to cut the salary of state workers.

The governor, when asked about following the proposal of California in raising the sales tax and extending it to services such as fees charged by lawyers or golf courses, said: “We are not California and we do not need to tax everything including the air we breathe.”

California, he said, has a problem with spending. The neighboring state has proposed raising taxes first. Nevada, on the other hand, has reduced spending first, he said.

After cutting budgets, “then we will see where we are at the end of the day,” he said.

“We will see a flood of people coming to Nevada to buy things if California does what it intends to do,” he said.

There has been mixed reaction to his softening his stance on taxes if all else fails. It ranges from some who don’t want any taxes raised to those who want to solve the problem by increasing revenues.

After a meeting with legislators last Friday, Gibbons said “all options” are on the table, including taxes. He will meet again Friday in Reno with lawmakers for a second session.

The governor noted that the Legislature would need a two-thirds majority in both houses to pass any tax. Democrats have a two-thirds majority in the Assembly but not in the Senate.

Gibbons also threw cold water on any plan to tax gold. The gold mines have the cost of production and the price per ounce of gold is diminishing.

“I am not in favor of any activity that is going to put at risk a business or the economy of this state,” he said.

Cy Ryan may be reached at (775) 687-5032 or cy@lasvegassun.com.

Discussion: 16 comments so far…

By BringtheRain

11/10/08 at 2:36 p.m.

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I love the line about Californians coming to Nevadans to shop. Because they're really going to drive hundreds of miles to save $10 on a $1,000 HDTV or $300 on a $20,000 car.

The governor clearly has a plan. Make Nevada's state workers the hardest working in the country, then pay them less for it. Makes perfect sense.
By KDR81

11/10/08 at 3:05 p.m.

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Raising taxes during an economic downturn is a very bad idea. Taking money out of the economy to fund government makes the economy take that much longer to recover.
By jfnance32

11/10/08 at 3:20 p.m.

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It is better to raise taxes and put private citizens who work hard for a living out of work.

Yes.....lets kill jobs.
By worstnightmere

11/10/08 at 6:57 p.m.

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Gibbons needs to cut his pay at least half, then maybe he will show some leadership. That is all this Governor is worth, we the people of Nevada work to hard to pay $141,000.00 a year to a Governor who does not produce leadership....
By tbulloch

11/10/08 at 8:16 p.m.

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Is anyone making 100% of what they made last year - ooops I forgot - All state and municipal employees?
By gmag39

11/11/08 at 12:15 a.m.

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Another brilliant idea from The Guv. Pay cuts.
THAT will really help the morale of those already stretched thin because of budget cuts.
He is a special leader.
By gmag39

11/11/08 at 12:17 a.m.

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p.s. I doubt the Luv Guv is living paycheck to paycheck like most average folks.
By azsk8fan

11/11/08 at 5:45 a.m.

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Let's see if the Governor wants to lead by example - let's wait to see if he cuts HIS pay first!
By 2zero

11/11/08 at 6:01 a.m.

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Tax GOLD! Gold mining "windfall" tax! No one loses their job and maybe, just maybe this state can build a transportation system and actually teach children in good schools!

Palin did a "windfall" tax on oil, Gibbons needs to follow the conservative leader of the GOP and tax the "carpet baggers".
By Tahoety

11/11/08 at 11:10 a.m.

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Despite Low Business Taxes, Our State IsNot Highly Rated By U.S. Business The 2008 Forbes annual report of "The Best States For Business" ranked Nevada only 19th -- in part, Special Report The Best States For Business because we were rated 47th in Quality of Life (an index of schools, health, crime, cost of living and poverty rate) rate). The CNBC.com report on "America's Top States for Business 2008" ranked Nevada 45th -- in part,
because we ranked next to last in education and below average on quality of life and cost of living living.
By Tahoety

11/11/08 at 11:12 a.m.

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(NOTE: I found this on the RGJ.com site) Mining is one of the, if not the most, profitable businesses and/or industries in Nevada. Yet mining is one of the least taxed (when compared to say, the Casino/tourist industry.) Mining pays the basic Nevada business taxes (which are next to nothing to "inspire growth") and payroll taxes. Mining is also charged a Net Proceeds of Minerals Tax (NPOMT). This tax is essentially a property tax which taxes only the NET price, after several deductions, on the sale of gold at a 5% rate. Local counties and cities in which the mines operate receive nearly 66% of that NPOMT while the state general fund receives 33%. In 2006 mining paid $192.4 million in combined state and local taxes. That means places like Battle Mountain and Valmy shared nearly $127 million while the state got $63.5 million. I understand the "complex" nature of raising taxes on mining but something needs to be done; most mining laws are archaic. Bare minimum; reverse the percentages that local and state funds receive. We have no problem charging 13% room tax in hotels, an extra 1% or so in mining won't kill the industry, despite their complaints. Nevada produces 82% of the total US gold production. In turn, the US is in a "virtual tie" for second/third place with Australia in global gold production. Mining IS good for Nevada but it SHOULD and COULD be better!
By Tahoety

11/11/08 at 11:24 a.m.

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Nevada ranks 51st (out of 50 states and Washington D.C.) in the total number of state and local government employeesper 1,000 residents.
By NevadaFive

11/11/08 at 8 p.m.

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Where are some innovative ideas here - none - or raising the mining tax - too complex? Gov. reducing his salary - pure PR move - but very, very acceptable considering his "class act" thus far. Getting more consumers into Nevada is one place to start. Other than the obvious - why are they staying away. Expenditures in the school system? Yes, we have no choice but to "double-up" class sizes and rid the schools of those who refuse to obey - challenge, fine - but respect absoulute. Parents must be involved - I mean in the classroom. Many of them treat the system as a child-care facility. State employees will have to work four-days (10 hr shifts) from Tuesday thru Friday, except for the true, absoulute essential workers such as law enforcement, firefighters, etc. Temporary tax increases - fine. Possible state income-tax must be on the table, as well. Nuclear waste - on the table, but NIMBY. There has got to be some ideas out there - some realistic place to start.
By Molly

11/12/08 at 4:06 p.m.

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(The governor, when asked about following the proposal of California in raising the sales tax and extending it to services such as fees charged by lawyers or golf courses, said: "We are not California and we do not need to tax everything including the air we breathe.")

Why can't we tax those things, Mr. Gibbons? Because it might tick off the wealthy, perhaps? What's a few extra dollars to someone who can spare the extra money for such activities?

I'm a state employee, and I cannot AFFORD a pay cut, Mr. Gibbons. I'm already making about 30% less than a similar private sector job would pay, but because knowledge worker jobs are hard to come by in this state, and the economy is so bad, it will have to do. While I'm thankful to have it, my job actually COSTS me money, as when things are needed to do my job, the state says "Sorry! No money!", so I either do a crappy job, or I pay for things out of my own pocket (much like school teachers are forced to do to get supplies for their students).

My gas prices were ridiculously high this past summer and I struggled to pay them to put gas in my 10+ year old little Honda just like everyone else in the middle class. My food prices went up too, just like everyone else. The difference between Mr. Gibbons taking a pay cut at $140k+ and the rest of us is that there's not much left to live on after WE cut back! This whole idea that we average state employees are living the high life while everyone else is struggling just isn't true!
By Blossom1

11/12/08 at 4:29 p.m.

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So we have a state with a major revenue resource being a tourist and prosperity tax: significantly tax the gaming industry whose primary income comes from tourists.

But the economy takes a dump and the tourists quit coming. What does this guy advocate? Tax the gaming industry MORE. So, if I understand this correctly, we should become MORE dependent on the success of the casinos? Even though that has been proven to be catastrophic in hard times?!

But now we must "tighten our belts". What does this guy do? He takes away the cost of living increase for State employees! Then he tells us he is going to increase our cost of living by raising health insurance rates and reducing benefits. NOW he adds that he wants to reduce what we already make!

How about making the developers who made the cost of land skyrocket finish their projects like any individual would have to, even though it hurts, instead of exempting them from the required city improvements that go with their contracts for a start?!
By johnevegas

11/12/08 at 4:44 p.m.

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Lots of complaining and sarcastic suggestions, But nobody offers any real solutions.

I'm not a fan of Gibbons, but what else is this guy supposed to do? It would be nice to see some substantial suggestions here.